@@ -52,11 +52,25 @@ export default function useAccessibility({
     return focused;
   };
 
-  const handleKeyDown = (event) => {
+  const handleKeyDown = (event: KeyboardEvent) => {
     switch (event.keyCode) {
-      case ESC:
+      case ESC: {
+        // Let a nested menu handle Escape before closing the outer popup.
+        const overlay = overlayRef?.current;
+        const overlayElement = overlay?.list || overlay;
+        const rootMenu = overlayElement?.matches?.('[role="menu"]')
+          ? overlayElement
+          : overlayElement?.querySelector?.('[role="menu"]');
+        const targetMenu =
+          event.target instanceof Element
+            ? event.target.closest('[role="menu"]')
+            : null;
+        if (rootMenu && targetMenu && targetMenu !== rootMenu) {
+          break;
+        }
         handleCloseMenuAndReturnFocus();
         break;
+      }
       case TAB: {
         let focusResult: boolean = false;
         if (!focusMenuRef.current) {
 
@@ -28,3 +28,51 @@ it('closes without consuming Tab when the overlay ref is omitted', () => {
     trigger.remove();
   }
 });
+
+it.each([false, true])(
+  'leaves a portaled nested menu Escape to its owner (wrapped: %s)',
+  (wrapped) => {
+    const trigger = document.createElement('button');
+    const wrapper = document.createElement('div');
+    const root = document.createElement('ul');
+    const submenu = document.createElement('ul');
+    const child = document.createElement('li');
+    root.setAttribute('role', 'menu');
+    submenu.setAttribute('role', 'menu');
+    child.tabIndex = -1;
+    submenu.appendChild(child);
+    wrapper.appendChild(root);
+    document.body.append(trigger, wrapper, submenu);
+    const onOpenChange = jest.fn();
+    const { unmount } = renderHook(() =>
+      useAccessibility({
+        open: true,
+        triggerRef: { current: trigger },
+        onOpenChange,
+        overlayRef: { current: wrapped ? wrapper : { list: root } },
+      }),
+    );
+    try {
+      child.focus();
+      act(() =>
+        child.dispatchEvent(
+          new KeyboardEvent('keydown', { keyCode: 27, bubbles: true }),
+        ),
+      );
+      expect(onOpenChange).not.toHaveBeenCalled();
+      expect(document.activeElement).toBe(child);
+      act(() =>
+        root.dispatchEvent(
+          new KeyboardEvent('keydown', { keyCode: 27, bubbles: true }),
+        ),
+      );
+      expect(onOpenChange).toHaveBeenCalledWith(false);
+      expect(document.activeElement).toBe(trigger);
+    } finally {
+      unmount();
+      trigger.remove();
+      wrapper.remove();
+      submenu.remove();
+    }
+  },
+);